What Foreign Founders Need to Know About US Visas and Corporate Structure

Many of our startup clients are founded by foreign-born entrepreneurs who launched their companies while on a visa in the US.[i] A recent study found that more than half of unicorns in the US were founded by immigrants. If you are thinking about moving to the US to start your own company, or if you are already here as a visitor or student, and are wondering about visa options for foreign founders, you are not alone. In this post, we will discuss some of the most common visa options for foreign founders and highlight a few key considerations when setting up your business.

Common visa options for foreign founders

O-1

The O-1 visa is probably the most sought-after option for foreign founders thanks to its flexibility, fast processing timeline and unlimited number of available visas. Often referred to as the “genius visa,” the O-1 visa is designed for individuals with extraordinary ability in fields like science, technology and business. As a startup founder, you can secure an O-1 visa by showcasing significant business accomplishments and extraordinary skills in your field. Legally, the requirement is that you are among “the handful of those at the top of your field” worldwide, and that you have a sustained record of acclaim in that field. So you must show that your achievements relate to a specific field of expertise and can be documented over a sustained period of time. 

H-1B

You probably know of the H-1B visa since it is a popular visa option for highly skilled professionals in tech, engineering and finance. The US recently made significant changes to the H-1B rules, making the H-1B visa more accessible to foreign founders. One notable change allows foreign founders to sponsor themselves through their own company if they meet the eligibility requirements of the H-1B visa, like having the required education and specialized knowledge. A foreign founder can own 50% or more of the company and do a certain amount of nonspecialized tasks that are required to manage the company. However, the length of the H-1B validity may be shortened to 18 months. 

Unless your company qualifies for cap-exempt H-1B status through affiliation with a university or nonprofit research organization, the H-1B is subject to an annual lottery. The chances of selection vary, but in recent years have been in the range of 1:3 to 1:4. The lottery takes place in March each year for a start date of October of that year. 

L-1

If you already have an established business in a foreign country and are looking to expand into the US, then the L-1 “new office” visa might be a good option. It allows a foreign company to send executives or managers to its newly formed US branch to kick-start its operations there. This is a good option for well-established foreign companies starting up operations in the US, but can be challenging when the foreign company is small or a startup. 

E-2

If you are from one of the “treaty countries” (see the State Department’s website for a list), you may qualify for the E-2 treaty investor visa when you make a substantial investment into a US business and develop and direct the operation of that business. However, note that China, India, Brazil and Russia are not among treaty countries, so this visa option is unavailable if you are from one of those countries. Also, this visa is valid only as long as you (or other nationals of the treaty country) own at least 50% of the venture. So if you sell your shares and your ownership falls below 50%, you (and any employees with an E-2 visa) will lose your status. 

EB-5

The EB-5 program allows foreign founders to work and live in the US and obtain a green card by investing a required amount of money in a US business that creates a certain number of full-time jobs for US workers. While the new administration has recently proposed replacing the EB-5 program with a new program, as of the date of this post, the EB-5 remains a viable option for foreign founders.

F-1

A question we receive frequently from aspiring founders is whether they can start their own company while they are on an F-1 student visa. The short answer is yes, but with some restrictions and only if this involves a passive investment. As an F-1 student, you can start a business but cannot actively work for or manage it unless you get work authorization through optional practical training (OPT). Even while on OPT, your work for the startup must be related to your field of study in order to stay in compliance with F-1 visa rules.

The same rules apply for visitors. Any activity that could be considered work – i.e., anything that a company would normally hire a US worker to do – is a visa violation that could potentially have serious consequences.

Also, all work visas are employer-specific, so if you are in the US on an employer- sponsored visa (i.e., H-1B) and you want to launch an unrelated company, you can do so only through passive investment. Working on a side business without authorization can impact your chances of getting further US work authorization or visas in the future. 

Corporate structure considerations

When launching and growing your startup in the US, it is critical to work with immigration and corporate counsel to carefully design your company’s corporate structure. This will ensure compliance with evolving immigration rules and avoid any disruption to your business due to immigration issues.

1. Formation

One of the first questions you should think about before the inception of your startup is the type of entity you want to form and the jurisdiction in which the entity will be formed. Corporations (C corps) and limited liability companies (LLCs) are the two most common types of legal entities for startups. Delaware is the most popular jurisdiction for incorporating your startup, but there is no one-size-fits-all approach. Nevada also is becoming a popular alternative to Delaware for incorporation. Depending on the type of visa you are applying for and your business goals, a C corp might be better suited for your startup and vice versa. One of the ways to meet the O-1 visa requirement is to show that your startup has received significant venture funding. In this case, a Delaware C corp is probably the best corporate structure, as it is best suited for attracting venture capital thanks to its formal corporate structure, its flexibility and Delaware’s well-established legal framework. On the other hand, if raising qualifying investment is not a priority and not required under the rules for the type of visa you are applying for, an LLC could be a better option for its simplicity and tax efficiency.

2. Equity structure

Another key consideration when launching your startup is its equity structure. How much ownership will you have in the business? If you have co-founder(s), how do you split equity among the founders? Should the founder stock be subject to a vesting schedule? These are important questions to think about early on as you may structure the company’s equity differently depending on the different visa programs you are pursuing. Certain visas (e.g., the E-2 visa) require you to hold a certain amount of ownership to be eligible. They also may require that your investment in the startup be “at risk” and you be actively involved in the startup. Under these scenarios, a vesting schedule that puts the founder stock at risk of forfeiture could be helpful to show “at risk” investment and your continued commitment to the business.

3. Your relationship with the startup

A foreign founder needs to play a certain role within the startup to meet the relevant visa requirements. For some programs, such as the L-1 visa, the E-2 visa and the EB-5 program, you need to show that you play an active, central, executive or managerial role in the operations and decision-making of the business. For an H-1B visa sponsored by your own startup in which you have a controlling interest, you will need to show, among other things, a bona fide employment relationship between you and the startup. On the other hand, if you are on an F-1 student visa, then you should not be actively involved in the startup until you have obtained OPT or transitioned to another visa status. As a foreign founder, you will want your role and responsibilities to be clearly defined and documented in your company’s corporate documents, including bylaws, founder employment agreements and offer letters, and stockholder agreements, so that you can provide convincing evidence to support your visa application.

4. The board

Another important corporate governance issue to consider in connection with your visa choice is the structure of the board of directors of your company, to the extent that the entity is a corporation that has a board of directors. Does the board of directors consist of only you, or does it also include other members? Can the board of directors supervise your work? Does the board of directors have the power to fire you? For certain visa options where you need to show a bona fide employment relationship between you and the startup, it is critical to structure the board of directors in such a way that it is independent from your control and can oversee and supervise your work. The structure and authority of the board of directors should be laid out in the company’s governance documents, such as the bylaws.

5. Tax considerations

It is important to consult your tax advisors early on to understand the impacts that your startup and your visa status may have on your tax obligations. The type of entity you choose for your business, whether it is an LLC or C corp, may significantly affect your tax obligations. Your visa status also may determine your tax residency and how you are taxed in the US.

6. Additional considerations for Chinese and Russian founders

For founders from China and Russia, it is particularly important to carefully consider your visa options, given the current geopolitical tensions. If your business involves critical technologies, such as advanced computing, cybersecurity and artificial intelligence, you should be prepared for the likelihood of visa denials or significant delays. You also will need to think about issues involving CFIUS (Committee on Foreign Investment in the United States) regulations and US export control laws and plan ahead to minimize any risks.

Many thanks to Becki L. Young and the team at Grossman Young & Hammond for their assistance with this post.

Last reviewed on April 21, 2025. While we strive to keep our information accurate, please be aware that it may not reflect the most recent developments. Please consult with a qualified professional for the most up-to-date information.

[i] When advising companies that have foreign founders, Cooley’s client is the company, not the individual founder.

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